Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 20, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Denial of Input Tax Credit since the GST registration of the Supplier of Goods has been Cancelled with retrospective effect.
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Export of service or not - the marketing services are provided in respect of goods which are made physically available by the recipient of services (i.e. IIUL through its distributors) to the supplier of marketing services (i.e. the appellant), in order to provide the services. Therefore, as per Section 13(3)(a), the place of provision of service is the location of the supplier of services i.e. the applicant, which is in India. - the impugned supply does not qualify as export of services. - AAAR
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Classification of supply - supply of services - business of leasing of pallets, crates and containers - interstate movement of goods between the Units of the appellant or between the Unit of the appellant and customers premises - The transactions cannot be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act, 2017 as the said transaction would fall under the ambit of supply of services in terms of section 7 of the CGST Act. 2017. - AAAR
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Levy of IGST under reverse charge mechanism (RCM) - Supplier of the services located abroad (Outside India) - Amount paid to IVL Sweden against the receipt of support services in the form of consultancy - It is further found that IVL Sweden is acting as a guarantor in this entire arrangement - The remittence will be liable to IGST under RCM - AAAR
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GST on offline/online games such as Rummy - game of skill versus game of chance - principle of nomen-juris
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Input Tax Credit (ITC) is a vested right or concession - Can government impose conditions or restrictions for availing ITC?
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Refund of the unutilized Input Tax Credit (ITC) - Export of goods - rejection on the ground that the supplier has issued fake invoices - genuineness of the purchase - The allegations of any fake credit availed by M/s Shruti Exports cannot be a ground for rejecting the petitioner’s refund applications unless it is established that the petitioner has not received the goods or paid for them - the petitioner would be entitled to the refund of the ITC on goods that have been exported by it - HC
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Denial of Input Tax Credit (ITC) - Cancellation of registration of supplier - rejection of claim of the petitioner without considering the documents relied by the petitioner - violation of principles of natural justice - Following the decision of in the matter of M/S LGW INDUSTRIES LIMITED [ 2021 (12) TMI 834 - CALCUTTA HIGH COURT] matter restored back for fresh consideration - HC
Income Tax
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TDS u/s 195 - Liability to deduct tax on payments made on sub-contract work done - outsourcing a portion of on-site work to its subsidiary in China - Scope of amendment of Finance Act, 2010 in section 9 with retrospective effect - “person” mentioned in section 195 of the Income Tax Act cannot be expected to do the impossible - Order set aside - HC
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Addition u/s 40A(3) - cash purchases of the liquor from suppliers - The cash transactions, in any case, have been subjected to TCS collections etc. and are thus duly made chargeable to tax in the hands of the recipient. No enquiries have been made on behalf of the Revenue to dislodge the bona fides of the cash purchases. - Case made out on behalf of the assessee for exoneration from the clutches of Section 40A(3) - AT
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Unexplained cash credit u/s 68 - cash deposits during the demonetization period - the sources of such amount may be either of household savings or past income or the amount may have been received from any of the source mentioned in that Circular. Thus, the assessee is given benefit of Rs. 5.00 lacs in terms of Circular of CBDT, thereby remaining amount of Rs. 31 lacs – 5 lacs = 26 lacs is upheld. - AT
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Allowance of additional depreciation - asset put to use for less than 180 days during the earlier year - assessee has claimed balance of depreciation @10% (i.e. 50% of the applicable rate of 20% as per section 32(1)(iia)) as additions depreciation during the current year - Claim allowed - AT
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Unexplained investment - Additions u/s 69 - source of purchase of party - AO having not discharged onus for proving the satisfaction of the condition for application of deeming sections, he cannot invoke provisions of section 69 - the assessee has discharged burden of proof by filing details of loans taken - it is abundantly clear that the explanation offered by the assessee with regard to source for purchase of property is genuine transaction, which is supported by necessary evidences. - AT
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Transfer Pricing Adjustments - benchmarking the purchase of SIM cards by the assessee from its AEs - selection of MAM - CUP v/s RPM - CIT(A) has incorrectly applied the CUP method based on incomplete data, ignoring geographical differences and contrary to the Assessee’s own TP Analysis and contrary to TP Auditor’s Report. CIT(A) has also erroneously aggregated the transactions despite judicial pronouncements on the issue. - AT
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Revision u/s 263 - Penny stock purchases - penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. - The scrip in question is not listed in any stock exchange - the SOP guidelines issued by CBDT cannot be made applicable for unlisted scrips. Hence the ld. PCIT had assumed revision jurisdiction on incorrect assumption of fact and incorrect application of CBDT guidelines. - AT
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Impact of belated deposit of employees’ contribution towards the EPF and ESI under Income Tax
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Pharmaceutical companies’ gifting freebies to doctors, etc. - whether Allowable Business expenditure under Section 37(1)?
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Manner of disposal of application for advance ruling under Income Tax Act, 1961 - If the Members of a Board for Advance Rulings have differing opinions on any point, it will be referred to the Principal Chief Commissioner of Income-tax (International Taxation). - The Principal Chief Commissioner will nominate one Member from another Board for Advance Rulings, and the majority opinion will prevail in deciding the point or points of disagreement.
Customs
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Principles of unjust enrichment - Refund - leading cogent evidence including the evidence produced earlier - for the period prior to the introduction of Section 11B of the Central Excise Act, 1944 and Section 27(1A) of the Customs Act, 1962 - Apex Court dismissed the appeal of the STEEL AUTHORITY OF INDIA LTD. - The assessee has to prove that benefit of duty incidence has not been passed on to the buyer of the goods - SC
Indian Laws
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Direct tax collections for FY 2023-24 as of 17.06.2023 show net collections of Rs. 3,79,760 crore, a growth of 11.18% compared to the preceding year. - Gross collections stand at Rs. 4,19,338 crore, a growth of 12.73%, with Advance Tax collections at Rs. 1,16,776 crore. - Corporate Tax collections account for Rs. 1,87,311 crore while Personal Income Tax collections including Securities Transaction Tax stand at Rs. 2,31,391 crore. - Refunds of Rs. 39,578 crore have been issued, a growth of 30.13%.
Central Excise
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Process amounting to manufacture - purchase of duty paid chassis and undertaking body building activity - the appellant’s contention that fabrication does not amount to manufacture, does not merit consideration. - Demand of duty of excise confirmed - SC
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Valuation - Captive Consumption of goods by the sister concern - expenses to be included in the cost of production - Determination of Cost Plus 10% - Rule 8 - The issue in regard to demand, interest and penalty raised in respect of Material Transfer Expenses and Deferred Revenue Expenses is remanded to the adjudicating authority for de novo consideration - The demand in respect of Machine Shop Expenses, Notional Power Cost Expenses, Administrative Overheads and Abnormal Idle Capacity is set aside. - AT
VAT
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Doctrine of Promissory Estoppel - 100% tax exemption for a period of 7 years, in favor Tourism Industry - Even in the notification dated 07.01.2000 it is stated that the discontinuation shall not affect the incentives that have been already offered or committed by the Government until the eligibility of such incentives are completed. The eligibility could not have been rescinded before the period of eligibility expired as it is sovereign assurance. - HC
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Refusal of stay on the order qua the interest, as demanded u/s 30(2) of the MVAT (stay is granted to the petitioner on the tax as demanded) - separation of Composite order - Such composite orders are appealable orders - The tribunal directed to consider the petitioner’s stay application qua the challenge to the interest component - HC
Case Laws:
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GST
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2023 (6) TMI 777
Valuation of supply - Consideration for supply - Incentive received from Intel inside US LLC under Intel Approved Component Supplier Program (IACSP) - export of service or not - HELD THAT:- To qualify as a trade discount the three conditions should be satisfied that the buyer and the supplier have entered into an agreement which is not the case at present, as the incentive is being directly received from IIUL and agreement exists between the manufacturer and the supplier only and not with the distributor. Secondly, the incentive received is not directly linked to a specific invoice rather than the volume of sale undertaken by the authorized distributor of IIUL. Thirdly, there is no such reversal done by the Intel Authorized Distributors in the present case in relation to the goods supplied to the appellant. The wordings of Section 15(3)(b)(i) very clearly states that discount should be established in terms of the agreement entered into or at or before the time of such supply between the buyer and the supplier. Here the only agreement that is available on record is the agreement between IIUL and the appellant. Trade Discount or not - HELD THAT:- The appellant has not come up with any additional facts rather than saying plainly that the incentive received by them are in the form of trade discount. MAAR has rightly observed that no sale transaction of goods has taken place between the appellant and hence incentives will not be covered under the provisions of Section 15(3) of CGST Act, 2017. For the incentives to qualify as trade discount, an agreement between seller and purchasing party is a pre-requisite, the same is missing between the distributor and the appellant. Thus, the incentive received from the manufacturer is separate from the transaction undertaken by the appellant with the distributors. If incentives received by them are not considered as trade discounts, then whether it is consideration of any supply? - HELD THAT:- It is evident from the contract / agreement between appellant and IIUL that the amount received under scheme is to enhance supply, to emboss Intel brand in India and to keep customer base intact in INDIA and thus implied services are performed by appellant as per the outcome based contract. It can be conclusively held that the appellant is bound by the agreement to perform the following tasks:- (i) They will make their best efforts to sell and market the Intel products (ii) Assist Intel in implementing Intel s marketing campaigns (iii) Provide first-level technical product support. In lieu of the aforesaid services, the payout is being accrued to the appellant and not in the form of trade discount as claimed by them but in the form of supply of marketing as well as technical support services. Whether the supply would fulfill the condition of export of service? - HELD THAT:- In the present case, the marketing services are provided in respect of goods which are made physically available by the recipient of services (i.e. IIUL through its distributors) to the supplier of marketing services (i.e. the appellant), in order to provide the services. Therefore, as per Section 13(3)(a), the place of provision of service is the location of the supplier of services i.e. the applicant, which is in India. Hence, the impugned supply does not qualify as export of services.
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2023 (6) TMI 776
Classification of supply - supply of services - business of leasing of pallets, crates and containers - interstate movement of goods between the Units of the appellant or between the Unit of the appellant and customers premises - taxability of the aforesaid transaction since the business model is not operational - documentation for the movement of goods. Supply of leasing services - input tax credit as per the lease value charged by the supplier branch of CIPL - HELD THAT:- The recipient CIPL Karnataka who is recipient of the leasing services is eligible for full input tax credit in the transaction between the applicant and the CIPL Karnataka and hence the value declared in the invoice would be the value of goods or services or both as per the second proviso to Rule 28 and hence would be treated at the value of such supply - The aforesaid observation has been affirmed by AAR Maharashtra in the case of IN RE: M/S. B.G. SHIRKE CONSTRUCTION TECHNOLOGY PVT. LTD. [ 2021 (9) TMI 949 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] Wherein it has been held that we agree with the contention of the applicant that they may resort to valuation under Rule 28 of the CGST Rule in respect of transaction with related distinct persons who are eligible for full input tax credit as per the second proviso to Rule 28 of the CGST Rules 2017 - the valuation in the present case will be governed as per the Second proviso to Rule 28 of CGST Rules 2017 read with Section 15 of the CGST and MGST Act 2017. Documents that should be accompanied for the transaction - HELD THAT:- It is found that the question raised by the applicant doesn t fall in any of the categories mentioned under the provisions of Section 97(2) of CGST Act, 2017. Also, the present application has been done under the provisions of Section 97(2)(c) and 97(2)(g) of CGST Act, 2017. The question sought by the applicant doesn t fall in either of the categories and hence cannot be answered. Further, it is on record that no supply of goods or services in the scenario explained by the appellant has been undertaken. Whether movement of equipment from CIPL Karnataka to CIPL Tamil Nadu on the instruction of CIPL Maharashtra can be said to be mere movement of goods not amounting to supply in terms of Section 7 of the CGST Act and MGST Act, and thereby not liable to GST? - HELD THAT:- CIPL, Karnataka would be acting in two capacities, first as an independent entity under the CGST Act for the leased goods while the lease contract of the specific goods is in force and next as a bailee of CIPL, Maharashtra. Once the lease contract is over, the CIPL, Maharashtra should enter into lease transaction with the CIPL, Tamil Nadu for the specific goods which are given on lease or rent and in effect it would amount to CIPL, Maharashtra picking the goods and sending to CIPL, Tamil Nadu - it cannot be said that the goods are moving not as a result of supply under Section 7 of the CGST Act, 2017. It cannot be termed as a mere movement without any involvement of supply and the said transaction of supply of goods on rental or lease basis by CIPL, Maharashtra to CIPL, Tamil Nadu is liable to tax in the hands of CIPL, Maharashtra as the transaction is between CIPL, Maharashtra and CIPL, Tamil Nadu. Further, the services provided by CIPL, Karnataka to CIPL, Maharashtra in facilitating the transportation of goods to CIPL, Tamil Nadu are exigible to GST. Other questions are not covered under the ambit of the Advance Ruling in terms of section 97 of the CGST Act, 2017.
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2023 (6) TMI 775
Levy of IGST - amount paid to IVL Sweden against the receipt of support services in the form of consultancy - reverse charge mechanism - Exemption to service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient - place of supply - HELD THAT:- On perusal of the subject contract entered by the Appellant, IVL Sweden and MCGM. it is conspicuous that Appellant, i.e., IVL India, is being termed as the Consultant of the subject projects and IVL Sweden has been termed as the Parent Company. Further, the said contract also provides that the Commissioner would pay to the consultant, i.e. IVL India, the contract fee amount, in consideration for the work carried out by them. Thus, in view of the above, it is adequately clear that IVL India is providing services to MCGM, and accordingly raising invoices on MCGM for receiving the payment agreed upon in the subject contract. It is further found that IVL Sweden is acting as a guarantor in this entire arrangement which is evident from the stipulations/covenants provided in the documents, such as Bank Guarantee, Parent Company Guarantee/Undertaking which clearly indicate that the entire PMC work is being carried out by the Appellant, i.e., IVL India. The same is also evident by the term PMC (Project Management Consultancy) used for the Appellant in Parent company Guarantee/undertaking. Further, it is observed that though as per the Agreement entered by the Appellant and IVL Sweden with MCGM, and the Parent company Guarantee/undertaking entered with MCGM. the Appellant has been appointed as the PMC (Project Management Consultant) while IVL Sweden as the Guarantor for the completion of the subject projects, there is no doubt about the fact that the entire project management work is carried out by the Appellant with the help of IVL Sweden which has got all the expertise, work experience and resources to manage such projects. Place of supply - HELD THAT:- Since in this case the recipient of services is located in India and supplier of the services, namely, IVL Sweden, is located abroad, therefore, Section 13 of IGST Act, 2017 will be applicable to determine the place of supply. On perusal of the aforesaid provision, it is observed that the default provisions of Section 13(2) will cover the present case as the same does not fit under any of the remaining provisions ranging from sub-section (3) to-sub-section (13) of section 13 of the IGST Act, 2017 - it is observed that the place of supply of services in the present case will be the location of recipient of services, i.e., India. Whether the support services received by the Appellant being located in India and supplier of services, namely, IVL Sweden, located outside India, can be construed as import of services? - HELD THAT:- It is clear that the said support services received by the Appellant from IVL Sweden will come under the ambit of import of services as the said services fulfill all the criteria of the import of services - Once it has been established that service under question is import of services, the same will be liable for payment of IGST at the hands of the recipient of services in terms entry 1 of the Notification No. 10/2017-I.T. (Rate) dated 28.06.2017. Thus, it is held that the transfer of monetary proceeds by the Applicant to IVL Sweden, will be liable for payment of Integrated Goods and Service Tax under reverse charge mechanism under Entry No. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. Thus, the appeal filed by the Appellant is hereby rejected.
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Income Tax
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2023 (6) TMI 774
Scrutiny assessment - Validity of Notice u/s 143(2) - condition precedent for framing of an income tax assessment - HELD THAT:- The notice u/s 143(2) issued in this case does not suffer from any legal infirmity as it satisfies all ingredients under that provision. The order of assessment dated 20.12.2019 is confirmed qua this count. Upon conclusion of dictation of this order, learned counsel for the petitioner would request leave to file a statutory appeal before the Appellate Commission. The writ petition has been instituted on 09.03.2020, a few months beyond the statutory limitation provided. However, learned Standing Counsel does not very seriously object to this Court condoning the intervening delay. Hence, petitioner is permitted to approach the appellate authority by way of statutory appeal and such appeal, if filed, within a period of two (2) weeks from date of receipt of this order, shall be taken on file by the Commissioner of Income Tax (Appeals) without reference to limitation, but ensuring compliance with all other statutory conditions.
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2023 (6) TMI 773
TDS u/s 195 - scope of amendment of Finance Act, 2010 in section 9 - Liability to deduct tax on payments made on sub-contract work done - outsourcing a portion of on-site work to its subsidiary in China - default u/s Section 201(1) 201(1A) - whether services are not rendered in India? - amendment of Finance Act, 2010 in section 9 whereby Explanation below section 9(2) has been substituted with retrospective effect from 01/06/1976 whereby pre-requisition condition of rendering services in India had been done away - HELD THAT:- Admittedly, explanation to Section 9 of the Act has been substituted by the Finance Act, 2010. Therefore, it is applicable from and after A.Y. 2011-12. Admittedly, relevant assessment years for consideration in these appeals are 2009-10 and 2010-11. The substitution has taken place in the Finance Act, 2010, which is effective from 2011-12. In view of the authority in Engineering Analysis. [ 2021 (3) TMI 138 - SUPREME COURT ] wherein held person mentioned in section 195 of the Income Tax Act cannot be expected to do the impossible, namely, to apply the expanded definition of royalty inserted by explanation 4 to section 9(1)(vi) of the Income Tax Act, for the assessment years in question, at a time when such explanation was not actually and factually in the statute. Decided against the Revenue.
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2023 (6) TMI 772
Addition u/s 68 - unexplained cash credit entries found in the books of accounts - scope of miscellaneous application - assessee had earned income only from interest and agriculture and, therefore, did not maintain books of accounts, in the regular course - As submitted by assessee that this plea taken by the appellant/assessee was accepted by the Tribunal in the appeal concerning AY 2010-11 in miscellaneous application - HELD THAT:- Fundamental basis for moving the miscellaneous application was the misalignment in the two orders passed on merits by the Tribunal, concerning the addition qua which the appellant/assessee had expressed a grievance. We have also queried for the appellant/assessee as to when the aforementioned miscellaneous application was filed before the Tribunal who affirms that the aforementioned miscellaneous application was filed on 31.12.2018. The order dated 12.01.2023 deals with only the aspect concerning the absence of the error apparent on record, vis- -vis the order on merits dated 23.08.2018. Tribunal is required to deal with the order on merits [ 2019 (1) TMI 264 - ITAT DELHI ] passed by it qua AY 2010-11. We are inclined to set aside the order [ 2023 (1) TMI 1262 - ITAT DELHI] passed by the Tribunal in the miscellaneous application. The miscellaneous application is restored to its original number and position.
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2023 (6) TMI 771
Addition u/s 40A(3) - cash purchases of the liquor from suppliers - cash payment exceeding permissible limits - plea of the assessee towards existence of business expediency and reasonable cause associated for cash purchases - HELD THAT:- In the light of nature of business, the assessee has sufficiently demonstrated that strict adherence to payment through banking channel is, at times, not practicable and has the potential to severally hamper the ongoing business. No mala fide, in our view, can be attributed to the action of the assessee where he is new entrant and the demand of liquor in such business is generally asymmetric. No evasion of tax through cash payment can be envisaged in the present case owing to such transactions. The circumstances narrated on behalf of the assessee provide reasonable ground to show-case considerations of business expediency and existence of relevant factors which warranted cash payments in the wisdom and perspective of a businessman. The cash transactions, in any case, have been subjected to TCS collections etc. and are thus duly made chargeable to tax in the hands of the recipient. No enquiries have been made on behalf of the Revenue to dislodge the bona fides of the cash purchases. Nonetheless, the suppliers and recipients of cash are identified parties and well regulated. Case made out on behalf of the assessee for exoneration from the clutches of Section 40A(3) in the peculiar facts of the present case - Decided in favour of assessee. Additions on account of capital introduced by proprietor - CIT(A) rejected the explanation of the assessee on the ground that withdrawal made from the bank could be utilized for household expenses and the onus towards availability of cash is not discharged in the present case - HElD THAT:- As the assessee has failed to lead any cogent evidence to rebut the observations of the CIT(A). We thus are in no position to traverse the facts and decide independently. We thus see no reason to interfere with the approach of the CIT(A).
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2023 (6) TMI 770
Unexplained cash credit u/s 68 - cash deposits during the demonetization period - additions under amended provisions of Section 115BBE - assessee is a senior citizen - HELD THAT:- As the pattern in bank account about the debit and credit also does not matches with the huge cash available with the assessee as on 01/04/2016. Thus, no justifiable reason to interfere with the additions made by Assessing Officer and confirmed by ld. CIT(A). However, as find that the Central Board of Direct Taxes (CBDT) vide its Circular No. 3 of 2017 dated 21.02.2017 have clarified that a relaxation of Rs. 2.50 lacs in a case of an ordinary deposit and Rs. 5.00 lacs in case of Senior Citizen. It was further clarified that the sources of such amount may be either of household savings or past income or the amount may have been received from any of the source mentioned in para 2 to 6 of that Circular. Thus, the assessee is given benefit of Rs. 5.00 lacs in terms of Circular of CBDT, thereby remaining amount of Rs. 31,42,500 5,00,000 = 26,42,500/- is upheld. In the result, ground No. 1 of the appeal is partly allowed. Taxability of addition under amended provisions of Section 115BBE of the Act at the higher rate - Division Bench of Jabalpur Tribunal in ACIT Vs Sandesh Kumar Jain [ 2022 (11) TMI 126 - ITAT JABALPUR] held that the amended provisions to take effect from 15/12/2016 itself so impliedly effective from 01/04/2017 i.e. for A.Y. 2018-19. Direct AO to tax the additions at the old rate of tax prescribed u/s 115BBE i.e. prior to amendment applicable w.e.f. 15/12/2016. Grounds No. 2 and 3 of the appeal are allowed.
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2023 (6) TMI 769
Addition on account of community development expenses - AO disallowed the expenditure merely on the basis that the said expenditure are not incurred wholly and exclusively for the purpose of business - HELD THAT:- As it cannot be disputed that the expenditure incurred on environment health and safety, as stated above, are relevant considering the business in which the assessee is engaged, i.e. development and implementation of coal-based thermal power project. Therefore, once the expenditure has been accepted to be for the community development, and environment health safety expenses, the same cannot be held to be not incurred wholly and exclusively for the purpose of business in the year under consideration. We find no infirmity in the impugned order passed by the learned CIT(A) on this issue. Ground raised in Revenue s appeal is dismissed. Allowance of additional depreciation - asset put to use for less than 180 days during the earlier year - assessee has claimed balance of depreciation @10% (i.e. 50% of the applicable rate of 20% as per section 32(1)(iia)) as additions depreciation during the current year - HELD THAT:- Hon ble Karnataka High Court Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT ] held that if the plant and machinery eligible for additional depreciation u/s 32(1)(iia) are put to use for less than 180 days in said financial year and, therefore, only 50% of additional depreciation can be claimed in that year, balance 50% can be availed in the subsequent year. No infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no.2 raised in Revenue s appeal is dismissed.
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2023 (6) TMI 768
Reopening of assessment u/s 147 - Unexplained cash credit u/s. 68 - HELD THAT:- Reasons to believe for reopening and recorded reasons clearly set out to verify the source of amount of investment and not set out the escapement of income. In case of Manzi Dineshkumar Shah [ 2018 (5) TMI 1176 - GUJARAT HIGH COURT] has clearly set out that the AO cannot reopen the assessment which was already been verified by the AO. Thus, the reasons recorded here are not justified by the authority. Hence, the assessment itself is void ab initio - Decided in favour of assessee.
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2023 (6) TMI 767
Allowability of Prior period expenses when Mercantile method of accounting was being followed by the assessee - AR submitted that the quantum of amount payable to workers on account of wages/ salaries / PF etc. and sums payable to other authorities was not a liability of the assessee till it was determined by Hon ble Supreme Court - HELD THAT:- The Bench is of considered opinion that when the amounts otherwise denied by an assessee have become payable under the orders of Court, though they may relate to any previous year or past activity, they have to be considered to have accrued in compliance of the orders of the Court. Ld. CIT(A) has duly taken note of same in para no. 5.2.23, the same require no interference. Ground no 1 has no substance. Loan amount sanctioned by the Government for the purpose of business - As observed that in an attempt to revitalized the Super Bazar which was run by the assessee, the funds were introduced on various occasions by the Central Government in the form of unsecured loans. The matter on record show that the official liquidator has taken into consideration the same as made apparent by documents available and at the end of relevant year what stood as balance was written off at the instance of Government as being waived off. CIT(A) has taken notice judgment of Hon ble Bombay High Court in Mahindra and Mahindra [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] which has been later on confirmed by Hon ble Supreme Court [ 2018 (5) TMI 358 - SUPREME COURT] and given relief to the assessee. The same requires no interference. The ground raised by the department has no substance. Consequently the appeal of Revenue is dismissed.
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2023 (6) TMI 766
Unexplained investment - Additions u/s 69 - source of purchase of party - AO has rejected explanation furnished by the assessee only on the ground that the assessee has filed certain evidences to prove source for purchase of property and such claim is an afterthought - HELD THAT:- As assessee has filed all evidences to prove genuineness of the transactions, and creditworthiness of the parties in respect of all payments received from Mr.S.V.Ranga Reddy, which is source for purchase of property, by the assessee. When evidences filed by the assessee clearly shows that there is enough source for partnership firm to explain drawings of the partner, then, non-filing of return of income by the firm, cannot be a reason to reject explanation of the assessee for explaining source for purchase of property. In this case, the AO has rejected explanation furnished by the assessee only on the ground that the assessee has filed certain evidences to prove source for purchase of property and such claim is an afterthought. But, fact remains that when the AO is invoking deeming provisions, it was incumbent on the Assessing Officer, to bring on record material evidences which canbe said to lead to the satisfaction of the AO while making requisite investigations or adopt suchother means permissible in law at his comment. AO having not discharged onus for proving the satisfaction of the condition for application of deeming sections, he cannot invoke provisions of section 69 - As already stated by us in the earlier part of this order, the assessee has discharged primary onus and proved source for purchase of property. In this case, the assessee has discharged burden of proof by filing details of loans taken from Mr.S.V.Ranga Reddy, and also drawings from M/s.SVR Construction Co., by filing necessary details, including relevant ledger account copies through parties in their respective accounts, bank statements of partnership firm, and Mr.S.V.Ranga Reddy and also confirmation letters from the parties along with their ITR filed copies for the relevant assessment year. From the above, it is abundantly clear that the explanation offered by the assessee with regard to source for purchase of property is genuine transaction, which is supported by necessary evidences. AO is erred in making addition towards source for purchase of property as unexplained investment and taxed u/s. 69 - Decided against revenue.
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2023 (6) TMI 765
Validity of the assessment framed u/s 153C - mandation of satisfaction note recorded by the AO - searched person having recorded satisfaction of documents found during search belonging to the assessee - HELD THAT:- The arguments now being raised before us have already been dealt with by the ITAT in the first round and no grievance against the findings of the ITAT on the issue was raised by the assessee its MA, this issue stand adjudicated by the ITAT for all purposes, and the assessee is not entitled to, therefore, rake up this issue again during the hearing in recall, which as we have noted above is limited in scope, to adjudicate only the mistake in the order of the ITAT in the first round. We hold that the argument of the assessee that for a valid assumption of jurisdiction under section 153C of the Act, the AO of the searched person has to mandatorily record satisfaction of material or documents found during the course of search belonging to the assessee, is misplaced and against principles of law admittedly laid down in the case of Super Mall P. Ltd. ( 2020 (3) TMI 361 - SUPREME COURT] and is rejected
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2023 (6) TMI 764
Revision u/s 263 - short deduction of TDS - PCIT holding the assessment framed u/s 143(3) as erroneous in so far prejudicial to the interest of the revenue - whether the provision of section 40(a)(ia) of the Act can be invoked in the case of short deduction of TDS - HELD THAT:- Question answered in the case of CIT Vs. Prayas Engineering Ltd. [ 2014 (11) TMI 1086 - GUJARAT HIGH COURT ] as held there remains no IOTA of doubt that the provisions of section 40(a)(ia) of the Act cannot be invoked in the event of short deduction of TDS. Accordingly, the assessment framed by the AO cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-deduction of TDS. Also AO has framed the assessment after necessary verification about the payment made to M/s Bansal Cargo Movers which is evident from assessment order itself. Therefore, we are of the view that the assessment order has been framed by the AO after due application of mind. Accordingly, the same cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification. Decided in favour of assessee.
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2023 (6) TMI 763
Capital gain computation - computation of indexed cost of acquisition - Reference to DVO for determining FMV of the property in terms of provisions of Sec. 50C - Denial of deduction u/s. 54F - HELD THAT:- AO is completely erred in adopting full value of consideration in terms of provisions of Sec. 50C even though, he had referred the valuation of the property to the DVO. We further noted that in two co-owners case [ 2019 (11) TMI 1795 - ITAT CHENNAI] Tribunal has set aside the issue to the file of the Ld.CIT(A) to readjudicate the issue of computation of long term capital gains from sale of property after receipt of the Valuation Report from the DVO in terms of provisions of Sec. 50C. Since, the assessee is one of the co-owners of the property sold by family members, by following the decision of ITAT, Chennai Benches, in other co-owner case, we set aside the issue to the file of the Ld.CIT(A) for re-adjudication after receipt of the Valuation Report from the DVO u/s. 50C. In so far as, the appeal filed by the Revenue is concerned, the main issue involved is deduction claimed u/s. 54F - Since, the main issue of computation of full value of consideration in terms of provisions of Sec. 50C has been set aside to the file of the CIT(A), and other consequential issues like deduction towards indexed cost of acquisition and deduction claimed u/s. 54F also needs to be re-adjudicated by the CIT(A).
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2023 (6) TMI 762
Addition u/s 69A - Unexplained source of cash deposit - HELD THAT:- None of the authority had rejected the assessee s cash flow statement. The assessee had sufficient cash before the date of deposit of cash in bank. As per the submission of assessee, the sufficient cash balance is reflected on dated 27.12.2016. The opening cash is reflected amount which had sufficient to deposit the cash amount in the bank a/c of the assessee. CIT(A) had not made any proper reason for disallowance of balance amount. The assessee explained properly the source for depositing of cash in bank account. The entire evidence stands in favour of assessee.
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2023 (6) TMI 761
Addition of Transfer Pricing Issue - selection of MAM - CUP v/s RPM - CIT(A) adopting the CUP method for benchmarking the purchase of 8K SIM cards by the assessee from its AEs and rejecting the RPM method adopted by the TPO - HELD THAT:- As for the purpose of benchmarking international transactions pertaining to imports- the purchases of E- Cards, Pay Phone Cards and POS Component cannot be aggregated together as they are not inextricably linked, and they are required to benchmarked separately. Apart from adopted CUP based on incomplete data and ignoring geographical differences, further also committed an error by giving benefit of +5% on the average rate to USD 1.90 per card and calculated the rate per card to USD 1.99 and held that the transaction could be at Arm s Length. The said approach of the CIT(A) is found to be erroneous. CIT(A) has incorrectly applied the CUP method based on incomplete data, ignoring geographical differences and contrary to the Assessee s own TP Analysis and contrary to TP Auditor s Report. CIT(A) has also erroneously aggregated the transactions despite judicial pronouncements on the issue. The order of CIT (A) deserves to be set aside and the order of the TPO/A.O. shall be upheld by allowing the Ground No. 1 of the Revenue. Violation of Rule 46A - Revenue is aggrieved by the acceptance of additional evidence by CIT-A - HELD THAT:- Considering additional evidence admitted by the CIT(A) has not been helped the assessee in making the decision by the CIT(A), the Ground No. 2 urged by the Revenue has become only academic. Further, considering the fact that the ld. CIT(A) has recorded its reasons while admitting the additional evidence submitted by the Assessee and also considering the fact that the Ld. CIT(A) has provided opportunity to the TPO to examine the evidence submitted by the assessee, we find no violation of Rule 46A of the Income Tax Rules.
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2023 (6) TMI 760
Revision u/s 263 - Validity of reopening of assessment - HELD THAT:- As order seeking to be revised i.e the re-assessment itself is bad in law and is liable to be quashed due to various legal infirmities then any subsequent proceedings on the said illegal base order also would get automatically quashed. Hence the revision order u/s 263 of the Act deserves to be quashed on this count also. Penny stock purchases - Even on merits of revision order passed by the ld. PCIT only says that M/s Aditi Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the ld. AO while framing the reassessment. In this regard, it is pertinent to note that penny stock SOP guidelines have been issued by CBDT only in respect of listed scrips. In the instant case, Aditi Finance Pvt Ltd scrip is not listed in any stock exchange. We hold that the SOP guidelines issued by CBDT cannot be made applicable for unlisted scrips. Hence the ld. PCIT had assumed revision jurisdiction on incorrect assumption of fact and incorrect application of CBDT guidelines. Hence the revision order passed u/s 263 of the Act is to be quashed on this count also. Revision order passed by the PCIT u/s 263 of the Act deserves to be quashed both on law and also on merits - Decided in favour of assessee.
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Customs
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2023 (6) TMI 759
Maintainability of Refund claim - order of assessment in appeal not challenged - whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained? - HELD THAT:- The question of law involved in the instant appeals is covered by the judgment of this Court in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] where it was held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. The present appeals stand disposed of.
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2023 (6) TMI 758
Principles of unjust enrichment - Refund - leading cogent evidence including the evidence produced earlier - for the period prior to the introduction of Section 11B of the Central Excise Act, 1944 and Section 27(1A) of the Customs Act, 1962 - HELD THAT:- As the impugned order is of remand to the adjudicating authority, no interference of this Court is called for. However, it is observed that it will be open for the petitioner to prove while leading cogent evidence including the evidence produced earlier on the allegations of unjust enrichment and the same be considered by the adjudicating authority in accordance with law and on its own merits. The Special Leave Petition stands dismissed.
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Insolvency & Bankruptcy
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2023 (6) TMI 757
CIRP - Withholding the payments to be made to the petitioner company in relation to the works executed by the petitioner company - allegation of substandard work - liquidated damages - HELD THAT:- It is an admitted fact that the petitioner company has entered into an agreement with the respondents on 27.05.2013 and thereafter in response to the request made by the petitioner, first extension was granted in favour of the petitioner company up to 26.05.2017. But however, though the petitioner company has completed 85% of the work, the balance work could not be completed in view of the change of scope of work which includes preparation of drawings and specifications and also extension of time under a fresh agreement as the specifications in relation to the contract of RE walls is not suitable and therefore the petitioner company suggested for construction of retaining walls with Reinforced Cement Concrete, for which, a fresh agreement was not entered with by the respondents because of which the petitioner s company would not proceed with the work and thereafter the petitioner company also received a letter dated 11.08.2017 from the 4th respondent stating that the petitioner s EOT proposals up to 26.12.2017 as requested by them was forwarded to the 3rd respondent vide letter dated 25.05.2017 and the EOT was awaited and it was also stated that the transactions were approved by the competent authority on 10.08.2017 and in view of the changed circumstances, instead of giving extension of time to the petitioner company the respondents got issued a fresh notification calling for tenders though the petitioner has completed 85% of the works. It also appears that the financial creditors of the petitioner company have approached the NCLT, Chennai under the provisions of IBC Code, 2016 wherein an interim resolution professional was initially appointed and pending the proceedings before the NCLT a publication was made in relation to the claims of any third parties to which the respondents have not responded and have not choosen to file any claim before the NCLT and therefore a final order was passed on 20.07.2020 approving the resolution plan. In view of the same, the respondents are stopped from initiating any coercive measures against the petitioner company. In view of the above Judgment of the Hon ble Apex Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ], which was further followed by the High Court of Telangana in the case of The Sirpur Paper Mills Limited, vs. Union of India [ 2022 (1) TMI 977 - TELANGANA, HIGH COURT ], this Court holds that any debt in respect of payment of dues arising under any law for the time being in force including the ones owed to the Central Government or any State Government, or any local authority which does not form a part of the approved resolution plan shall stand extinguished and once a resolution plan is duly approved by the Adjudicating Authority under sub-Section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. The writ petition is disposed of directing the respondents to clear the pending bills with regard to 85% of the work completed by the petitioner without deducting the vigilance claim.
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Central Excise
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2023 (6) TMI 756
Condonation of delay of 109 days in filing appeal - Waiver of Penalty - attempt made by the present appellant to seek reopening of all the issues was declined by the Tribunal with reference to the fact that earlier challenge by the Revenue to the order dated 22-3-2018 was limited to the question of penalty - HELD THAT:- The Tribunal, ultimately proceeded to reject the appeal by its order dated 9-11-2021. The said order dated 9-11-2021 was questioned by the appellant before the High Court in Central Excise Appeal No. 1 of 2022, which was considered and dismissed by the High Court by its order in M/S. MEGHALAYA CAST AND ALLOYS PVT. LTD. VERSUS THE COMMISSIONER, CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE [ 2022 (4) TMI 731 - MEGHALAYA HIGH COURT ] while again noticing the limited scope of the appeal and while endorsing the findings of the Tribunal. As against the aforesaid order of the Meghalaya High Court, the petition filed by the present appellant is dismissed seeking special leave to appeal today by a separate order. Taking the totality of the facts and circumstances into account, there are no reason to condone the delay in filing of the present appeal against the said previous order dated 22-3-2018 nor there are any substance in the appeal on its merits - appeal dismissed.
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2023 (6) TMI 754
Process amounting to manufacture - purchase of duty paid chassis and undertaking body building activity - motor vehicles described in sub-headings 8702.10 and 8702.90 of Heading 87.02 - HELD THAT:- Given the structure of the statute which clearly comprehends Entry 87.02 [by specifically referring to Headings 8702.10 and 8702.90); that the activity carried on by the appellant results in a finished product i.e. useable buses, the appellant s contention that fabrication does not amount to manufacture, does not merit consideration. This Court is of the opinion that the impugned order therefore, does not call for interference. Appeal dismissed.
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2023 (6) TMI 753
Valuation - Captive Consumption of goods - expenses to be included in the cost of production to arrive at the assessable value of goods (Iron castings) for paying excise duty while clearing them to their sister units, or not - Determination of Cost Plus 10% (110% of cost of production) - Rule 8 - Machine Shop Expenses - Notional Power Cost Expenses - Material Transfer Expenses - Deferred Revenue Expenses - Administrative Overheads - Abnormal Idle Capacity - violation of principles of natural justice - revenue neutrality - time limitation. Material transfer expenses - HELD THAT:- The list furnished along with the documents are perused. The list is very long and detailed scrutiny is required to verify what are the items cleared as such and what are the non-duty paid items, if at all the contention of the appellant is to be considered - it is thus opined that this issue of material transfer of Rs.14438300/- requires to be remanded to the adjudicating authority. Deferred Revenue Expenses - HELD THAT:- On perusal of OIO for the year 2014-2015, it is seen that the appellant had furnished documents which were scrutinized and the demand was dropped by adjudicating authority in de novo proceedings. The appellant has to therefore produce documents to reconcile the demand on such expenses - this issue for the period 2008-2013, 2013-14 and 2015-16 (except 2014-15) has to be remanded to the adjudicating authority for de novo consideration. Administrative Overheads - HELD THAT:- It has to be understood that credit is availed on the basis of the law contained in CCR 2004. If the activity falls within the definition of input services , the manufacturer will be eligible to avail credit. Repair and Maintenance of office works, courier services, marketing and promotion services etc. are eligible for credit. However, para 5.7 of CAS-4 states that expenses in the nature of marketing and corporate office expenses are not to be included. This means that expenses under administrative overheads which are directly and exclusively used for manufacturing activity only have to be included in the cost of production - the demand raised by including the administrative overheads in the assessable value cannot sustain and requires to be set aside. Abnormal Idle Capacity - HELD THAT:- The table furnished by the appellant establishes that the actual production during the disputed period is much less than the capacity. It is also seen that for a few months the unit was closed. The authorities below have not considered these facts. After appreciating the provisions of CAS-4 as well as decision in ITC Ltd. [ 2014 (7) TMI 696 - CESTAT CHENNAI ] it is held that the abnormal idle capacity claimed by the appellant has to be considered. The demand raised by not considering the claim of abnormal idle capacity cannot sustain and requires to be set aside. Violation of principles of natural justice - HELD THAT:- It is seen that appellant had failed to furnish CAS4 statement before the department. However complex may be the manufacturing activity of the appellant, they cannot deviate from the provisions of law and principles laid by the Department for calculation of assessable value when goods are cleared to sister units on stock transfer basis. The department therefore cannot be found fault for deputing a person to verify the correctness of the value adopted by the appellant for discharging duty when goods are stock transferred to their sister units. There are no merit in the argument put forward by the appellant on this ground. Revenue Neutrality - HELD THAT:- It is correct that the appellant will be eligible to avail credit on the duty paid on the goods cleared by the appellant s foundry division. Eligibility of credit by the appellant s other unit does not take away the responsibility of the appellant to pay duty. Further, the issue which is recurring in these appeals involves valuation of the goods cleared from their unit to sister units on various heads that are claimed to be not includable in the cost of production by the appellant. The issue being of recurrent nature needs to be addressed so that there is no revenue loss in future clearances made by the appellant to the sister units and so the argument of revenue neutrality cannot be accepted on the basis of the facts of this case. Time Limitation - HELD THAT:- The appellant has not furnished full details to the department.They had deviated from filing CAS-4 statements and had adopted their own method contending that the filing of CAS-4 would be humungous due to volume of materials, clearances involved. We are not therefore able to persuade ourselves to hold that the SCNs are time barred. The issue in regard to demand, interest and penalty raised in respect of Material Transfer Expenses and Deferred Revenue Expenses is remanded to the adjudicating authority for de novo consideration - The demand in respect of Machine Shop Expenses, Notional Power Cost Expenses, Administrative Overheads and Abnormal Idle Capacity is set aside. The impugned orders are modified accordingly. Appeal disposed off.
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CST, VAT & Sales Tax
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2023 (6) TMI 755
Disbursal of subsidies/incentives under a Scheme floated by the State of West Bengal, being The West Bengal State Support for Industries Scheme, 2008 - promotion of large and medium scale industries in the background regions of the State - no liability to pay VAT - HELD THAT:- It transpires from the records that the Scheme in question was floated for the purposes of extending certain additional financial support for promotion of large and medium scale industries in the background regions of the State, as mentioned in the very first paragraph of the Notification dated February 28, 2011, which contains the Scheme. In the said Gazette Notification, clause 16 is one of the modes of payment but not an eligibility criterion. Eligibility criteria for incentive under the Scheme are stipulated in clause 6 of the Scheme. There is nothing in the said clause to indicate that the payment of VAT to the State is a necessary pre-requisite for getting benefit of the Scheme. An empirical statement generated from the data base of the Commercial Tax Department on the basis of the quarterly returns filed for each of the four quarters of the consecutive financial years reflects the tax payment behaviour of the dealer, in the light of which the Additional Commissioner opined that the present case be treated not as an EOU dealer but as a situation where the applicant dealer is not in a position to fully/partly adjust VAT payable with the sanctioned amount of capital and interest subsidies as per the T C [Terms and Conditions] of the WBISS 2008 Scheme. There is no scope of the petitioners being liable to pay any further VAT dues under the Scheme. Hence, as the petitioners are otherwise eligible to get the benefit of the Scheme and have already being admitted to be so twice, once for the subsidy under the Scheme and once for the interest subsidy by the respondent Authorities themselves, there is no impediment on the part of the respondent Authorities at all in disbursing the entire subsidy to the petitioners, including the interest subsidies, as already sanctioned. Petition allowed on contest, thereby directing the respondent Authorities to immediately disburse the entire amount of the subsidy which the petitioners are entitled to get under the West Bengal State Support for Industries Scheme, 2008 [as amended up to December 31, 2010] to the petitioners within an outer limit of three months from date.
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2023 (6) TMI 752
Withdrawal of Exemption from payment of tax payable under the provisions of the KVAT Act 2003 - Doctrine of Promissory Estoppel - exemption for sale of food articles and beverages by new tourism units - no notifications have been issued in exercise of the powers conferred under Section 5(2) of the KVAT Act 2003 granting exemption. Revenue s case is, in the absence of any notification issued under the provisions of the KVAT, assessee is not entitled for any exemption. HELD THAT:- A perusal of Exemption Certificate dated March 25, 2003 makes it is clear that assessee is a registered Tourism Industry and is eligible for 100% tax exemption for a period of 7 years. By Government Order No. FD 303 CSL 99, dated January 07, 2000, the State Government discontinued sales tax based incentives. However the incentives already offered and committed were saved. By issuing subsequent Notification No. FD 363 CSL 2006, dated July 17, 2007 under the KST Act, it was clarified that the incentives offered earlier would remain unaffected. In the present case, assessee has availed the benefit for 100% sales tax exemption in the year 2003. The KAT has rightly recorded that the vide Notification dated July 17, 2007, the State Government have clearly stated that rescinding of the Notification dated November 12, 1999 shall not be applicable to the dealers who have made investment in establishment in a new tourism units and the incentives offered and committed by the Government shall not get affected. Revenue has placed reliance on Hotel Madhuvan Case [ 2008 (12) TMI 703 - KARNATAKA HIGH COURT ], where this Court was examining whether a tourism unit is an industrial unit or not - In the instant case, the issue involved is whether petitioner is entitled for benefit of exemption. Admittedly, assessee has obtained exemption certificate dated March 25, 2003 for a period of seven years with effect from February 27, 2003. Though the State Government issued a Notification on January 07, 2000 discontinuing sales tax based incentives, the same has been clarified vide Notification dated July 17, 2007 to the effect that the notification dated January 07, 2000 shall not affect the dealers who have made investment in establishing new tourism units. This question was not under consideration in Hotel Madhuvan Case. Therefore, the said authority does not lend any support to the contention advanced on behalf of the Revenue. It is recorded further that even in the notification dated 07.01.2000 it is stated that the discontinuation shall not affect the incentives that have been already offered or committed by the Government until the eligibility of such incentives are completed. The eligibility certificate was valid for 7 years and could not have been rescinded before the period of eligibility expired as it is sovereign assurance. The contention urged by the Revenue that in absence of any specific notification under the KVAT Act, assessee is not entitled for exemption, is untenable - There are no error in the impugned order passed by the KAT - Revision Petition is dismissed.
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2023 (6) TMI 751
Refusal of stay on the order qua the interest, as demanded under Section 30(2) of the Maharashtra Value Added Tax Act, 2002 (stay is granted to the petitioner on the tax as demanded) - separation of Composite order - exercise of appellate jurisdiction under Section 26(6B) of the Act. The petitioner has contended that once the nature of order passed by the first appellate authority itself was a composite order, it was not correct for the tribunal to dissect such composite order by bifurcating/ separating the order as to the interest component and to reject the petitioner s stay application qua the interest amount as demanded under Section 30(2) of the Act. HELD THAT:- The provisions being Sections 23 providing for assessment, Section 26 read with 26(6A) and 26(6B) providing for a first appeal and a second appeal respectively. We also need to note the provisions of Section 30 providing for interest payable by a dealer or a person. Section 30 falls under an independent Chapter namely Chapter VI providing for Penalty and Interest . The orders, which include an order on payment of interest by the assessee, necessarily are composite orders. Thus, the basis for any demand for interest is primarily the liability to pay tax. Hence both the orders namely the direction to pay tax and the direction to pay the interest, are interconnected and become part of a common order, which is an appealable order. It is rightly contended by the petitioner that an appeal against such composite order would necessarily include within its ambit appealability of the orders pertaining to the interest. Such composite orders are appealable orders under the provisions of sub-section (6A) and (6B) of Section 26. As a corollary the provisions of sub-section (6C) would become applicable in so far as such appeals as provided under sub-sections (6A) and (6B) are concerned, namely an entitlement of the assessee to seek stay of the recovery of the disputed dues including on interest. The legislature itself has avoided to provide anything in regard to an order on interest to be kept away from the purview of such appeals which the assessee would file under either sub-section (6A) or (6B) of Section 26. Thus to read any bar to appealability in regard to an order on interest, forming part of a composite order passed by the assessing authority or by the first appellate authority, to be read in sub-section (6B) sub-section (6C) would be reading something into such provisions, which has not been expressly provided by the legislature - it is not the intention of the legislature that a composite order cannot be passed either by the assessing authority or by the first appellate authority. In any event, it is quite possible that in a given situation, the order passed under Section 30(2) of the Act levying interest on the assessee, itself would fall to the ground, in view of setting aside of the principal order on assessment. Provisions of Section 85 of the Act which provide for a bar to certain proceedings - HELD THAT:- Sub-section (2)(b-3) of Section 85 provides that an order passed under sub-section (2) or (4) of section 30 in regard to the interest payable by the dealer under the provision of the Act, no appeal shall lie - the bar under sub-section 2(b-3), such provisions would be applicable in regard to the proceedings where the issue is only in regard to an independent order on interest passed under Section 30(2) or (4) of the Act. Hence, it would not be appropriate to read the bar under sub-section (2)(b-3) of Section 85 of the Act, to the appealibility of composite orders, being assailed in appeals under Section 26 (6A) and (6B) of the Act, when the order passed by the assessing officer or first appellate authority is a composite order - the submissions as urged on behalf of the petitioner on the interpretation of the provisions of Section 26 (6A) and (6B) of the Act to be kept distinct from the provisions of Section 85(2)(b-3) of the Act, agreed upon. The petitioner s reliance on the decision of the Supreme Court in Arcot Textile Mills Limited vs. Regional Provident Fund Commissioner and Ors. [ 2013 (10) TMI 1570 - SUPREME COURT] is also well founded on the principles of interpretation of the provisions in question although the Supreme Court was considering the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Supreme Court, interpreting the provisions of Section 7A and 7Q of the Employees P.F. Act, observed that the competent authority under the Employees P.F. Act while determining the moneys due from the employee shall be required to conduct an inquiry and pass an order which, according to the petitioner, is akin to the order passed by the assessing officer. The Supreme Court observed that an order under Section 7A of the Employees P.F. Act is an order that determines the liability of the employer under the provisions of the Act and while determining the liability, the competent authority offers an opportunity of hearing to the concerned establishment - The Supreme Court observed that such an order shall be amenable to appeal under Section 7I of the Employees P.F. Act, and the same is true of any composite order a facet of which is amenable to appeal under Section 7I of the Employees P.F. Act. It was observed that if for some reason when the authority chooses to pass an independent order under Section 7Q, the same would not be appealable. Respondent s (Revenue's) contention that the provisions of Section 85(2)(b-3) be read with the provisions of Section 26(6A) and (6B) of the Act, cannot be accepted. If such an interpretation is accepted, it would certainly lead to an absurdity. The tribunal directed to consider the petitioner s stay application qua the challenge to the interest component - petition allowed.
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